Double tax hit haunts near retirees

The Australian

18 February 2019

Simon Benson – National Affairs Editor

More than half a million Australians approaching
retirement could suffer a double tax
hit to their savings plans under Labor’s policy to axe franking credit refunds
and curb negative gearing, new tax data analysis says.

More than 40 per cent of the 1.3 million people who already claim
tax deductions on their rental properties are between 45 and 59, Australian
Taxation Office figures show.

With an average rental loss of $9500, this group would also stand to
lose the most from the scrapping of the scheme.

The government will claim that those already in the planning stage
of their retirement would have two major retirement investment options taken
off the table with the scrapping also of franking credit refunds, which are
relied on by 900,000 Australians and mainly those in retirement.

While those already negatively gearing property will have their
current arrangements grandfathered under Labor’s policy, the data reveals that
people approaching retirement relied most on the tax deduction.

Negatively gearing property would be available in the future for
only those buying new investment dwellings. The government argues that the
impact would mean a significant investment option would be removed in the
future for people planning for retirement.

Josh Frydenberg plans to revive the government’s campaign against
Labor’s tax plans with a property industry roundtable this morning in Canberra
hosted by the Property Council of Australia.

The council
has warned against any changes to negative gearing or capital gains tax,

claiming the
risk was too great, considering the current cycle in the housing market.

The Treasurer will use the roundtable to muster support among
industry groups, which include the Master Builders Association and the Real
Estate Institute of Australia.

The ongoing analysis of the 2015-16 ATO tax data being conducted by
Mr Frydenberg’s office has revealed that Labor’s twin tax policies were heavily
weighted against middle-aged Australians approaching retirement and those who
had already finished their working lives.

Those aged between 45 and 59 represented the largest group to lose
money from the scrapping of negative gearing on established dwellings.

This represents more than 525,000 Australians or 40 per cent of the
1.3 million Australians who claim rental losses on investment properties.

Of these, a
total of 183,000 were aged 45-49, 183,000 aged 50-54 and 160,000 aged

55-59.

The ATO data is the same that has been used by the government on
numerous occasions to attack Labor’s policies.

Mr Frydenberg said Labor’s “retiree tax” punished aspiration and no
one would be hit harder by Labor’s housing tax than Australians approaching
retirement.

“More than half a million Australians aged between 45 and 59 years
of age will be worse off and have their hard-earned investment smashed by
Labor’s changes to negative gearing,” he said.

“Not only is the proportion of those affected by Labor’s housing tax
highest in this age group, their rental loss is the greatest too: the average
net rental loss for those aged between 45 and 59 is around $9500, well above
any other age group.

“This is the same age group that is working hard to put their
retirement plans in place and who will also be punished by Labor’s retiree tax.

“In a double whammy for Australians approaching retirement age, not
only will Labor raid their nest egg, they will also punish those who have
invested in the housing

market.

“As a retiree under Labor, if you own your home it will be worth
less, if you rent a home it will cost you more and if you invest in shares you
will earn less.”

An exclusive Newspoll published last week by The Australian showed strong opposition to Labor’s $55 billion plan
to scrap franking credit refunds.

Senior Labor sources privately admit the so-called “retiree” tax is
unpopular but have calculated it would impact mainly Coalition voters rather
than their own.

Last week, Bill Shorten stood by the policy, despite increasing
pressure to modify or scrap it, saying he was “not for turning” on the policy.

In response, Mr Frydenberg said: “Another saying of (Margaret)
Thatcher would have been more apt: ‘The problem with socialism is that you
eventually run out of other people’s money’.”

Labor says the tax measures address an imbalance in the system that
favours the well- off.
It says only 2 per cent of Australians would be
affected by the scrapping of franking credit refunds, while reducing the
capital gains tax discount from 50 per cent to 25 per cent would mostly affect
the top 10 per cent of income- earners.

Monday, June 3, 2019

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